Napster is close to finalising deals with three major record companies.

These arrangements permit Napster to use their music service as part of a subscription-based service, the NewYork Times Web site has reported.

The three companies, BMG Entertainment, Warner Bros, and EMI have yet to conclude the deal's fine print.

Industry sources say that these companies have the right to pull out of the deal if Napster fails to adhere to specified security standards.

The record companies are three of five that the Recording Industry Association of America (RIAA) was working on behalf of when it filed a lawsuit against Napster in December 1999. That lawsuit resulted in a court injunction, filed in March this year, that has led to the removal, by filters, of much of the commercial music that was previously available on the service.

The three companies have since announced plans to launch their own subscription music service, MusicNet, in association with RealNetworks. The talks involve Napster agreeing to license music from the MusicNet service, the report said.